European Stocks Extend Gains on Fed Rate Cut Hopes
European stocks traded mostly higher on Thursday, building on Wednesday’s momentum as hopes grew for more monetary easing from the U.S. Federal Reserve.
Market Performance in Europe
The DAX index in Germany climbed 1.1%, while the CAC 40 in France also gained 1.1%. However, the FTSE 100 in the U.K. slipped 0.2%. These moves followed Wednesday’s rally, when European indices rose by about 1% after a weak U.S. jobs report boosted expectations for further Fed rate cuts.
Fed Policy and U.S. Shutdown
Investors now anticipate potential quarter-point rate cuts at each of the Fed’s remaining meetings this year. This sentiment grew stronger after the ADP employment report showed weaker hiring than expected.
Meanwhile, the U.S. government shut down many of its operations on Wednesday after a Republican-backed spending bill failed to pass in the Senate. As a result, the release of official economic data, including the nonfarm payrolls report, has been put on hold. This has pushed investors to rely heavily on private data like ADP figures.
Eurozone Economic Data
In Europe, central bank officials, including ECB Vice-President Luis De Guindos and board member Patrick Montagner, spoke at various events. The eurozone unemployment rate for August rose slightly to 6.3%, compared with 6.2% in July.
At the same time, eurozone inflation increased to 2.2% in September from 2.0% in August. This supports expectations that the European Central Bank will keep interest rates unchanged for a third consecutive meeting on October 30.
Corporate Spotlight: Renault and Chery
In corporate news, Renault is reportedly in talks with China’s Chery Automobile about a partnership to build and sell cars in South America. According to Bloomberg, the discussions cover Colombia and Argentina. Renault would provide factory access, while Chery would contribute capital and product design support.
Oil Prices Fall Back
Oil prices slipped on Thursday, reversing earlier gains that came after reports of potential tighter sanctions on Russian crude.
- Brent crude futures fell 1.6% to $64.31 a barrel.
- WTI crude dropped 1.7% to $60.76 a barrel.
Both benchmarks had already lost around 1% on Wednesday, with Brent closing at its lowest since June 5 and WTI since May 30.
The Group of Seven (G7) finance ministers also pledged to increase pressure on Russia by targeting companies that help circumvent oil sanctions. Additionally, the Wall Street Journal reported that the U.S. plans to provide Ukraine with intelligence for long-range missile strikes on Russian energy infrastructure.
